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India’s February gold imports surged to 50 tonnes: GFMS

MUMBAI: India’s February gold imports surged to 50 tonnes, up more than 82 percent from a year ago, on pent-up jeweller demand and as retail consumers ramped up purchases for weddings, provisional data from consultancy GFMS showed on Wednesday.

The rise in imports by the world’s second-biggest consumer of the precious metal will support global prices that are trading near their highest level in 3-1/2 months but could widen the South Asian country’s trade deficit.

“Pent-up demand on the ease of the cash crunch and wedding related demand lifted imports in February,” said Sudheesh Nambiath, a senior analyst at GFMS, a division of Thomson Reuters.

In November, Prime Minister Narendra Modi scrapped 500- and 1,000-rupee banknotes notes that were 86 percent of the value of cash in circulation, as part of a crackdown on corruption, tax evasion and militant financing.

India’s gold imports had fallen to 27.4 tonnes in February 2016 as buyers postponed purchases in anticipation of a reduction in the import duty in the budget at the time.

This February, retail demand improved due to the wedding season and as cash supplies became normal, said Bachhraj Bamalwa, a jeweller based in the eastern Indian city of Kolkata.

But imports in March could fall as a recent rally in prices has started deterring buyers.

“Consumers are struggling to adjust to higher prices. They are postponing purchases expecting a correction in prices,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler based in Kolkata.

In the local market, gold futures were trading at 29,380 rupees ($439) per 10 grams on Wednesday, up more than 9 percent since falling to 26,862 rupees in December 2016, its lowest in 10 months.